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Bitcoin has undergone a significant correction in recent months, and tension remains in the market. Although the price has appeared more stable for a few weeks, there is still fear that it could fall further.
This fear is not entirely justified, concludes research firm K33 Research. According to analyst Vetle Lunde, the recent price drops are actually a sign that the market is forming a bottom, and December could be a turning point.
December: A Turning Point for Bitcoin #
The weak phase of Bitcoin and the resulting price decline were largely caused by structural factors. Bitcoin ETFs, which previously always brought in a lot of money, saw mainly outflows in October and November. Additionally, the CME futures market is at its lowest activity level in years, indicating caution from traditional players. Bitcoin itself continues to lag behind stocks and is even posting the weakest ratio to the Nasdaq since late 2024.
Due to the correction of recent months, fear prevails in the market. The Fear and Greed Index also points to extreme fear with a value of 20. According to K33, the current price value mainly reflects this fear, not the underlying fundamentals.
They therefore see a greater chance of an increase and possibly even a December as a turning point:
“The chance of a strong upward move is much more realistic than a repeat of an 80% drop, according to K33”
Positive Short-Term Developments #
The firm also argues that the market is overweighing risks that may only become relevant in years, while short-term signals are actually positive. The long-term risks that some investors worry about, such as quantum computing, potential selling pressure from MicroStrategy, or possible problems at Tether, are simply not yet relevant, according to the research firm. Such scenarios are years away and should not determine the current price development.
K33 finds the factors that are just around the corner more interesting. For example, new regulations could allow U.S. 401(k) pension plans to access crypto. The Federal Reserve also seems to be developing a pro-crypto stance, which could provide significant support for Bitcoin through lower interest rates and more ample liquidity.
In short, while many investors still fear more pain, December could mark the beginning of a new recovery for Bitcoin, according to the research firm.